Innovative Technologies for Modern Power Sector: Lessons from the United States
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Transcript of Innovative Technologies for Modern Power Sector: Lessons from the United States
Innovative Technologies for a Modern Power Sector: Lessons from the United StatesCenter for Public Policy Research, Cochin, KeralaNovember 20, 2015Varun Sivaram, Ph.D.Douglas Dillon Fellow
Council on Foreign Relations
The Perils of “Technological Lock-In”
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Through “lock-in,” a mediocre solution can crowd out the advanced technologies required to displace fossil fuels
First mover creates a barrier to market entry…
…endangering long-term emissions reduction
• The first technology to achieve scale in the market benefits from learning-by-doing, reducing its costs and increasing its market share
• Theoretically superior technologies face a Catch-22: they need scale in order to fulfill low-cost, high-performance potential, but they cannot scale up against an entrenched incumbent
• The cost and performance targets to materially displace fossil fuels are much lower than those which can be achieved with current technologies
• For example, MIT “Future of Solar Study” demonstrates that solar faces a moving target for cost-competitiveness that will become harder as more solar is deployed
• “Think ‘potato chip,’ not ‘silicon chip’” ~Nate Lewis, Caltech Professor
IncumbentChallenger
TimeCost
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Learning Curves for a Technology Market
Solar PV’s “Moving Target” for Grid Parity
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Barrier to entry
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Nuclear, solar, and batteries are examples of “lock-in” from the past, present, and future, respectively Examples of today’s dominant designs and tomorrow’s
emerging technologies
• Light water reactor (LWR)
• All U.S. reactors and most reactors around the world are LWRs
Batteries
Solar
Nuclear
Dominant Design Path to Dominance Emerging Technologies
• Crystalline silicon solar panel
• Silicon controls >90% of the global market
• Lithium-ion battery
• Tesla, BYD to scale up production by >10X for EV, grid applications
• Adm. Rickover chose LWR for U.S. submarines Civilian power sector followed this design
• 1950s Bell Labs invention
• Chinese scaled up due to familiarity with microchip processing
• Companies like Panasonic have scaled up Li-ion from electronics applications to electric vehicles
• Gen. IV reactors (gas/salt/liquid metal cooled) offer safety, cost advantages
• Small, modular reactors more versatile• Printable materials (e.g., perovskites) promise lower cost, higher efficiency
• Applications include window coatings
• New chemistries (Li-S, Mg-ion) increase energy density
• Applications include long-range EVs, better grid storage
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New Models Needed for Cleantech Funding;Venture Capital is the Wrong Model
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The cleantech VC boom in the United States, from
2006-2012, is now a bustCleantech entrepreneurship from 2004 to the present. (a) Number of cleantech start-up companies that received A-round funding in a given year. (Source: CrunchBase) (b) Total venture capital investment in private cleantech companies by year. (Source: Bloomberg New Energy Finance)
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Risk/Return: Cleantech investments from 2006–2012 did not fit the VC desired risk/return profile
Comparison of VC Preferred Risk/Return Profile with Actual Investment Profiles by Sector. Actual A-Round VC investment risk/return profiles by sector and year from 2006–2011, compared with nominal value preservation and lowest public market benchmarks
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Return: Cleantech start-ups would still have delivered lower returns to clairvoyant investors VC Investment Returns Across Cleantech, Medical Technology, and Software Technology Sectors.
Average return to a clairvoyant A-Round VC who chooses a basket of the ten most valuable post-exit companies in each sector.
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Convergence Between Power Systems in the Developed and Developing World
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In developed countries, power systems will move toward hybrid centralized/decentralized “smart grid” architectures
Source: IEA 2011
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In developing countries, a bottom-up approach can also yield a hybrid model through self-organization (i.e., “swarm”)
Source: Groh 2014
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In India, solar power can provide decentralized energy if distributed solar
gets policy support
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Figure 4: The Modi administration has set an overall target of 100 GW for solar deployment by 2022, composed of three types of solar
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20220
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Cumulative Solar PV Capacity (GW) (Historical and Projected)
Source: MNRE
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Figure 5: Utility-scale solar deployment is the most likely of the three segments to track official targets, at least through 2019
Utility-Scale Solar Drivers Utility-Scale Solar Forecasts and Goal (GW) Federal Schemes
o Solar Parks: 25 “Ultra-Mega” solar projects of at least 500 MW each will collectively produce 20 GW
o National Thermal Power Corporation Viability Gap Funding scheme will procure 15 GW by 2019
State Schemeso Each state has a solar target,
and most progress is likely to come from utility-scale solar: e.g., Maharashtra (7.5GW), Andhra Pradesh, Telangana (5GW),
o Almost all state schemes involve private developers bidding in a reverse auction for a guaranteed tariff to sell power to the state
Other Deploymento Utilities and power companies
bound by renewable purchase and generation obligations (RPOs and RGOs) are expected to procure 7 GW by 2019
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Other Deployment
Federal Schemes
State Schemes
Official Targets
Sources:
MNRE Official Targets
Bridge to India Forecasts
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Figure 6: Distributed Solar Deployment is Projected to Dramatically Lag Official Targets
Types of Distributed Solar Distributed Solar Forecasts (GW) Residential
o Rooftop solar for residential customers is not currently economic anywhere in India
o Subsidized residential electricity tariffs prevent significant savings from solar under net metering
Commercialo Distributed (<1MW) solar
systems for commercial buildings are economic in at least 10 states*
o Favorable federal tax treatment supports solar competitiveness
Industrialo Industrial sector is slightly less
economic for distributed solar than commercial sector because of lower tariffs
o Still, with favorable tax treatment, distributed solar for industrial facilities are economic in at least 10 states*
Sources:
MNRE Official Targets
Bridge to India Forecasts
40 GW official target by 2022
*Source: Bridge to India
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New technologies exist with great potential to provide decentralized energy in the
developing world
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Perovskite solar: the biggest solar breakthrough in 60 years
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Perovskite solar: Trojan Horse approach to market entry
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Check out the blog!
M. Levi and V. Sivaram. CFR’s Energy, Security, & Climate Blog: www.cfr.org/blogs/levi